DoorDash Inc (DASH.N) said on Wednesday it was cutting about 1,250 jobs, or 6% of its total workforce, as the food-delivery company looks to keep a lid on costs to cope with a slowdown in demand.
DoorDash went on a hiring spree to cater to a flood of orders from people stuck at home during the height of the pandemic, but a sudden drop in demand from inflation-wary customers has left the company grappling with ballooning costs.
“We were not as rigorous as we should have been in managing our team growth … That’s on me. As a result, operating expenses grew quickly,” Chief Executive Tony Xu said in a memo to employees that was posted on the company’s website.
“Given how quickly we hired, our operating expenses – if left unabated – would continue to outgrow our revenue.”
The company’s shares, which have fallen about 64% this year, were up about 4% in premarket trading.
Earlier this month, DoorDash reported a bigger-than-expected quarterly net loss of $295 million, raising questions about the growth prospects of delivery firms as economies reopen.
DoorDash joins a list of multinational American firms, including Amazon.com Inc (AMZN.O), Meta Platforms Inc (META.O) and Twitter Inc, that have laid off thousands of employees in recent weeks as they brace for a potential economic downturn. read more
While DoorDash’s Xu reiterated that the business has been more resilient compared with other e-commerce companies, he said reducing non-headcount operating expenses “wouldn’t close the gap.”
DoorDash, which closed an all-stock deal this year with Wolt, has total headcount of about 20,000.